Startup Software Development: Everything You Need to Know

Mobile and web applications have become an inseparable part of most businesses today. Business owners implement them to increase their remote customer engagement, enhance workflow optimization, or be a part of their service.

Startups benefit from applications more than any other type of business as they can use them for acquiring investments. However, if large enterprises have large budgets and can afford to learn from their own mistakes, for most tech startups, custom software development is a one-shot game. Therefore, business rookies should treat the process carefully and prepare for their first app creation campaign to reduce the risks of failing and losing their funding.

To help startups nail their mobile and web development, we created this guide on startup app creation. This article will be helpful to SaaS startups as well as for those who plan to develop custom software to get to the customers and provide their services.

Here you'll find:

• Particular traits of startup projects that influence the app development process.
• Challenges they face during their app development.
• How to handle early-stage startup development processes.
• Major steps towards successful software development for startups.

Peculiarities of software development for startups

High uncertainty level

Startups are very unpredictable and can change their courses of action several times during their establishment, perfecting themselves. For example, you can alter your app's key features after the minimum viable product (MVP) release, when the user feedback shows that some of them don't work as expected.

Because of such a level of unpredictability, you should make your software development process more flexible. Many startups and custom software development companies practice an agile project management paradigm that allows them to switch directions, applying ad-hoc decisions more easily.

Groundbreaking product ideas

Startups usually revolve around a disruptive product idea that can change the old ways of doing something and enhance an industry. At the same time, implementing such an idea and creating the software product to manifest it, is a complex task. Largely because of the innovative nature of the project. Breaking a path is always more difficult than going on a bitten track.

When disrupting startup software, you'll need to find ways to turn your ideas into the key features of your would-be app – in other words, go through the product idea validation phase. Thus, prepare yourself for multiple brainstorming sessions and find experienced and ingenious developers who can find ways to express those ideas in code.

Venture capital dependency

Startups always need a fair amount of funding to stand up and hold firm. This aspect influences the startup software development process, adding unique steps like MVP development, IPOs, and others. Those steps enable the project to receive more resources.

Basically, investors' participation is one of the core survival aspects of custom software development for startups. If a startup fails to attract the necessary investments, it ceases to function.

Startup software development challenges & How to overcome them

Branding and marketing

Many startup founders overlook this aspect of their product development, especially in the early stages of development. Focusing on the product and application itself is all-important, but the project start and further brand awareness largely depend on your marketing strategy.

The earlier you get in touch with your customers and create the expectation, the better your product launch will be. Neglecting this aspect can slow down or even ruin your startup brand development.  

Niche selection

It can pose a great challenge to define the market segment where your product will fit perfectly. At the same time, it can determine the whole startup's success. Therefore, dedicate the proper amount of time and resources to finding a suitable niche for your future market-ready product.

Security

For your startup to be a success, you need to provide a high-security level for your custom software product. First of all, to comply with international security policies your app should protect sensitive customer data so that it remains untouched by hackers.

Making a secure application can pose a difficulty even for large enterprises let alone startups. Thus, you shouldn't bypass client-side and app-side security starting from the earliest stages of your application development.

To protect your mobile/web app, prevent security risks, and avoid disrupting existing systems (if any), make sure that you provide:

• Enough password policies for app users as well as employees
• Limited access to your startup resources through VPN
• Local/cloud database protection
• Sensitive data encryption.

Product scaling

At certain stages of your startup development, your product and overall business process development can undergo some minor or major changes. These changes can create difficulties for you, depending on the scale of those changes. To handle those in the best way possible, you should back up your decisions with actual information and implement them step-by-step.

Above that, you will need to watch your budget and plan your scaling expenses in advance. Having a detailed project estimation, you will know how much money to seek from your investors.

Take this free project estimation template to quickly calculate your development costs. Besides, we will recommend leaving some money for unplanned expenses. We will pick the funding & budgeting in more detail later on in the article.

Team

The team issues can influence your project much more than it seems. The most widespread ones are the following:

Hiring software developers

Finding and onboarding professionals for your startup software development project takes hours of search and interviews. As your startup evolves, you will need to open an HR department for that purpose. In fact, you can skip this challenge and hire a software development company that has its own developers on standby. All the employee care and responsibility for the application quality are also on the company's side.

Promotions

Another important team issue that can pop up during the software development for startups is faulty positioning and unreasonable promotions. Initial startup teams usually include close friends and family members which can create a certain bias when it comes to team structuring. Family and friend bonds can straighten your company's core and are wonderful per se. But when startuppers confuse these affections with the person's actual abilities, it can lead to a disaster. Simply put, your development team selection should be based on a person's professional skills and leadership qualities, not personal preferences.  

Co-founders' conflicts

It happens when co-founders or stakeholders cannot find the middle ground on a certain software development aspect. As a result, they are stuck, being torn between various business development paths.

This can pose a threat to the project's success, creating a negative working atmosphere. To avoid any development interruptions, you can create a legal treaty where the roles, fields of responsibility, and project decision-making order will be clearly outlined.

Product quality

Sturtuppers hurry up to get funds and proceed to the next stage of their project development. The rush can lead to overlooking some issues with their software. The cure is the proper preliminary preparations such as BA examination of the project, gradual development process, and thorough QA routines at each stage to make sure your startup application is bug-free and ready to make your users happy.

Fundraising and budgeting

One of the most acute problems of software development for startups face is funding and budget distribution. At the very beginning, startup owners rely on their own savings or get support from their friends and family. This money doesn't seem so difficult to get. However, as the project grows, it needs more and more financial injections to maintain itself and expand. As a result, startuppers turn to various fundraising strategies.

Venture capital

Venture capital funds invest their money in return for equity in your startup during the IPO process. Sometimes, they even acquire a company for a fairly large amount of money if, in their opinion, it has the potential to be the next big thing. Becoming stakeholders of your newly-christened company, they can start to participate in decision-making, assist with their business experience, and use their valuable connections to promote your product.

Venture capitalists come into play when a startup project has already obtained a certain level of maturity. Oftentimes, this maturity is indicated at least by the functional MVP with largely positive feedback from clients and growing incomes.

Business angels

Business angels are individuals who use their financial resources to enhance a startup in the earlier stages of project development. As well as venture capitalists, they get the company's equity too. The main difference between angel investors and venture capitalists is that angel investors' support is the stepping stone that leads a startup from family money to venture capital funds. This also means that venture capital is several times larger than business angel investments. In addition, venture capitalists have a company or financial institution behind them while business angels act as individuals.

Bank loans

In this case, you take money from a bank to pay it back with interest. Perhaps, it's not the best option for startups considering their uncertainty, because here you'll have strict paying time frames. In other words, bank loans are the last resort to find the money for your startup app creation.

Crowdfunding

You can use crowdfunding platforms like Kickstarter to collect some money for your startup project. Crowdfunding money can support your custom software development at any stage. However, the more money you are planning to collect, the more effort you should put into the project promotion which includes advertisements on social media.

Also, to attract more donations, you need to create a great description for your project with a video presentation, project roadmap, and donation options with the corresponding benefits for contributors. Special offerings in return for generous donations are a must on crowdfunding platforms.

Rational budgeting

Some startuppers, especially newbies, tend to spend beyond means when they get their first big check. Expensive cars, restaurants, luxurious offices, and business class flights are very pleasant for one's ego but deadly for the startup project, making its first steps in the world of big business.

Instead, invest in your startup product production and custom development as much as possible. The product development will include hiring, administrative expenses, hardware, and salaries. Besides, allocate funds for marketing to promote your product and create the fertile ground to sow the seed of your MVP. The better the seed is sown, the richer the harvest will be.

Ways to organize software development for startups

Hiring in-house software developers

Building your own development team is a great long-term solution for startups. You create your own team that will inherit your vision and spirit that will shine through your app in the later stages.

Nevertheless, finding great developers, designers, QA & BA specialists can take months. Long interviews, while your soul seeks to make your ideas work faster, can extinguish the flame of your inspiration and spoil your startup vibe.

Here are the major pros and cons of hiring an in-house team:

Pros

• Better team communication and easier management because in-house employees become a part of your startup culture.
• Building the team for a long-term collaboration.
• Faster engagement speeds up the working process.
• In-house developers charge less than outsourced teams or companies.

Cons

• In-house developers can have less motivation to accomplish the work faster.
• It takes time to build a great in-house software development team.
• You need to provide your employees with working facilities, hardware, and health insurance.

Partnering with a startup software development company

Many startups opt for outsourcing to access rare technical expertise they may not have in-house. The practice of outsourcing software development is common among startups facing budget constraints, tight timelines, and specific technical needs. Thus, this is the most hassle-free way to create your MVP and expand it to a fully-fledged application.

Why outsourcing your startup product development can be beneficial

Firstly, outsourcing allows startups to maintain flexibility in adjusting project scopes and priorities in response to market feedback. Partnering with such a company will free you from all the hiring-related tasks we've mentioned earlier. You can focus on your business development, marketing, and promotion while your technical partner (in the form of a software development company) assumes all the responsibility regarding startup application development. Many of them also offer a free consultation, allowing you to "assess the fit" early on.

Secondly, you can find close-knit developer teams with versatile expertise, quality assurance specialists, business analysts, project managers, and other tech pros in one place. What's more, with a reliable partner, you can pay more attention to customizing your product. Custom software development company provides startups with tailored software solutions to address their unique needs. The right software development partner can accelerate a startup's time-to-market and enhance product delivery efficiency.

And, finally, outsourcing software development can help startups manage financial risks and reduce costs. But remember that large tech companies pay more attention to their enterprise-grade projects and charge a lot for their services. At the same time, small and middle-size companies (SMEs), specializing in software development for startups, can be the best suite for MVP creation projects. Consider geography as well — for example, Eastern European outsourcing can offer developer rates significantly lower than in the United States.

Therefore, if you are planning to hire a startup software development company, don't fall for the company's size but the number of successful startup projects they've had.

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While choosing your tech partners, look if they:

• Have an office in your country of residence.
• Offer startup software development as a separate service with special pricing plans for MVP creation and other offerings (e.g. free discovery phase). It means that they take such projects seriously.
• Have startup case studies or success stories.
• Have QA and BA specialists.
• Apply agile methodologies and the right project management tools to keep development efficient and manageable.
• Provide clear communication. Effective communication with outsourced teams is crucial for project success and requires established channels for feedback and updates.

Speaking about the negative sides of cooperation with companies providing software development services, first of all, high prices should be mentioned. Professional services come for a corresponding price. Then, comes the human factor — the disagreements with developers or managers on the company's side. However, this is an extremely rare case.

Finding a technical co-founder

As an option, you can find a technical co-founder who will take over this side of your project. This is a very convenient way of creating a startup software cause you don't need to spend money at the moment but pay this person with a fair share of your young company.

At the same time, with all the pros of such an approach, you can face some conflicts that we've mentioned earlier, in the challenges part. Unfortunately, disagreements between startup founders are not unusual nowadays, especially when they have different perspectives on business and product development.

Startup software development process

Market research

Startups often lack sufficient market research, which is a key reason for failure. Therefore, before diving into the software building itself, you need to define the market sector your service, and product fit. To achieve that, perform thorough market research. Read the related social surveys, recent statistical information, and any other source that can provide you with relevant information on the current market state.

Technology selection

Now you know your market — get to know the platforms on which you will build your product. The choice of web and mobile development platforms is so extensive you need to do thorough research to find the one that suits your particular needs.

In case you found a technical co-founder or hired a provider of software development services, you won't need to do it. However, you still should explain what functions you want your app to have in a clear way. It can also become problematic for you will need to put your vision into the technical concepts, so hiring a BA specialist can fix this problem. Often, startup software companies offer BA services along with developers and QA specialists.

Application development

Startup app development starts from a PoC (Proof of Concept) or an MVP. MVPs today provide real and immediate value to users, not just bare-bones prototype development.

MVPs consist of the most essential features for users. Including this step into your startup development will allow you to launch your project earlier, start to receive feedback from the users with first incomes, and get the additional investment round to scale up your application. The user feedback you get during your MVP testing is vital for continually improving the app after the launch.

What else you should know about startup MVP design:

• Launching an MVP typically takes 2 to 6 months based on complexity, enabling quick market entry.
• MVP development requires careful planning of architecture and technology choices.
• Startups should collect and analyze data from user interactions to inform future iterations of the MVP.
• A clickable prototype can be used to test ideas and gather early feedback before developing an MVP.
• MVP development often involves a balance between speed and maintaining quality features.

What methodology to use in software development for startups

Software product development for startups involves frequent iterations and rapid prototyping. There are some popular methodologies that can be used. For example, the Lean methodology focuses on user feedback and emphasizes the Build-Measure-Learn cycle. Kanban uses visual boards to track tasks and optimize workflow without enforcing specific time frames. Scrum is an Agile development model that structures development into short, time-boxed periods known as sprints.

Agile practices allow startups to respond quickly to changing requirements and user feedback.

The app creation process is classical for an MVP stage as well as following software expansion cycles.

As a rule, the process includes:

Analysis

Basically, the business analysis includes market research, technology stack selection, and translation of your ideas into clearly formulated development tasks.

Design

Creation of the UI/UX part of your software. Making a custom user interface in line with the functions it should perform.

Implementation

The coding process itself. Connecting the front-end (UI/UX) with the backend (processes under the hood, 3d parties).

Testing

QA specialists take the stage and make sure that your app is bug-free and ready for release. It's a great practice to mix your QA routines with development. Thus there's no strict consequence between the two stages as they usually take place simultaneously.

Release

The show time. Let the world know about your product and get ready for the rewards and feedback. Again, the better your marketing strategy and its implementation, the louder your announcement will be. And the louder the announcement, the more people will get familiar with your product.

Maintenance

Product maintenance is essential for perfecting your software. Post-launch support involves analyzing user interaction data to quickly identify common issues.

Updates and bug fixes are critical for maintaining functionality. Therefore, in the post-launch phase, startups must be prepared to address change requests from users effectively. Analyzing user interaction data helps identify common issues quickly.

Failing to provide adequate post-launch support can damage your startup’s reputation and lead to losing users. Regular maintenance ensures the software stays secure and up-to-date with the latest technology. Setting up a Continuous Integration and Delivery (CI/CD) pipeline can streamline updates and bug fixes.

Feedback analysis

Once you've received feedback from your first clients, it's time to act upon it and develop your product further. Be ready to have annoyed customers who will point out your application's flaws. Instead of arguing with them, take notes and make a list of what you have to fix or add to your product in order to make it perfect.

Application expansion

Here starts another software development cycle. Take your feedback analysis, transform and extend your application according to it, and see your startup grow into a unicorn.

Resume

Startup projects are:

1) Uncertain so they require more flexibility from your product development team.

2) Have an ambitious idea to manifest.

3) Depend on the investments.

Major startups' challenges lie in:

1) Market niche definition & branding identity.

2) Product and intellectual property security.

3) Startup software and business scaling.

4) Team-building & structuring.

5) Providing a high-quality software product.

6) Fundraising & budget distribution.

You can organize your custom software development process by:

1) Hiring in-house employees and managing the process by yourself.

2) Partnering with a company that provides software development services.

3) Finding a tech-savvy co-founder.

Startup product development cycle:

• Market research
• Tech stack selection
• MVP creation
• MVP feedback analysis
• App scaling.

Choosing a startup development partner for your custom software

Startups face constant pressure to grow quickly, stand out in the market, and use their resources wisely. That’s where custom software comes in.

A well-built custom solution offers more than just basic functionality — it’s designed for scalability, so it grows as your business does. Scalability is a critical feature of custom software for startups. A scalable product integrates smoothly with your existing systems (including legacy ones), streamlines workflows, and boosts productivity from day one.

Custom software development also supports your startup’s brand identity by enabling tailored user experiences that resonate with your target audience. It’s a cost-effective investment, helping you optimize development resources and operational efficiency. Plus, with built-in analytics capabilities, you’ll be better equipped to collect insights, track performance, and make smarter decisions.

If you’re building a startup that demands flexibility, performance, and a competitive edge, custom software is the foundation that can make it happen.

Since 2015, we have helped startups develop their custom applications, secure investments, and turn their MVPs into scalable solutions. The Akveo team offers inclusive startup software development services, including web/mobile app development, business analysis (BA), QA, UI/UX design, branding, and project management — all backed by technical expertise.

With us, you can dedicate more time to your idea shaping and business development while our savvy and seasoned professionals take care of the tech side of your project.

If you feel like you need a professional startup development company to develop your start-up MVP run like clockwork, book a free startup consultation at Akveo.

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